Finance Minister Nirmala Sitharaman on Thursday reviewed the state of the economy at the meeting of the Financial Stability and Development Council (FSDC), in view of disruptions caused by the COVID-19 pandemic.
This was the first meeting of the FSDC, which comprises RBI Governor and other financial sector regulators, since the coronavirus outbreak.
The 22nd meeting of the FSDC, which was held via video conferencing, assumes a greater significance considering that the economy is expected to contract by 5 per cent by some estimates amid the virus crisis.
Various measures to maintain financial stability in the context of COVID-19 have been reviewed, an official said after the meeting.
The meeting also took note of the activities undertaken by the FSDC Sub-Committee chaired by RBI Governor Shaktikanta Das and the initiatives taken by the various regulators in the financial sector.
The FSDC is the apex body of sectoral regulators, headed by the finance minister.
Besides the RBI governor, SEBI chief Ajay Tyagi, IRDAI chairman Subhash Chandra Khuntia, Insolvency and Bankruptcy Board of India (IBBI) chairman M S Sahoo and PFRDAI chairman Supratim Bandyopadhyay were present in the meeting.
Economic Affairs Secretary Tarun Bajaj, Revenue Secretary Ajay Bhushan Pandey, Financial Services Secretary Debasish Panda and other top officials of the finance ministry also attended the meeting.
This was the third meeting of the FSDC after the Narendra Modi government returned for the second term in May last year.
The RBI last week said the impact of COVID-19 is more severe than anticipated and the GDP growth during the current financial year is likely to remain in the negative territory. It projected some pick-up in growth impulses from the second half (October-March) of 2020-21 onwards.
On Tuesday, rating agencies Fitch and Crisil drastically cut India''s economic growth forecast for the current fiscal year due to a prolonged lockdown.
Fitch forecast 5 per cent contraction in 2020-21, a sharp decline from 0.8 per cent growth projected by the global rating agency in late April.
Crisil also predicted the economy to shrink by 5 per cent in the current fiscal. Earlier, it projected a growth of 1.8 per cent.
Earlier this month, the government announced about Rs 21 lakh crore stimulus package to help the nation tide over the economic crisis induced by the coronavirus and the lockdown to curb its spread.
The mega economic package includes the Reserve Bank''s Rs 8.01 lakh crore worth of liquidity measures.
Sitharaman had announced this economic package in five tranches, which included a Rs 3.70 lakh crore support for MSMEs, Rs 75,000 crore for NBFCs and Rs 90,000 crore for power distribution companies.
Besides, free foodgrains to migrant workers, increased allocation for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), tax relief to certain sections and Rs 15,000 crore allocation to the healthcare sector to deal with the pandemic, were also announced as part of the economic package.